London open: Stocks fall as Fed and BoJ leave policy unchanged
UK equities declined on Thursday as the Federal Reserve and the Bank of Japan left policy unchanged.
The Fed left interest rates unchanged at 0.25% to 0.50%, as expected, while Chair Janet Yellen struck a fairly dovish note and conceded the upcoming UK referendum was a factor in the decision.
“The Fed is running into some credibility issues,” said CMC Markets’ Jasper Lawler.
“The wash of hawkish talk from Fed members throughout May has been shown to be inappropriate in the context of the last payrolls report. The June meeting has seen the Fed, again, have to step back. Whilst the median dot plot estimate remains for two rate hikes this year, the shift of five members to just projecting just one, is a dovish development. FOMC participants also lowered their rate hike projections by 30 bp to a median 1.6% by the end of 2017.”
The Bank of Japan maintained interest rates at negative 0.1% and decided against additional stimulus, sending the yen to a two-year high.
The attention now turns to the Bank of England which releases its policy decision at 1200 BST. Analysts expect no change to interest rates or the asset purchase programme amid uncertainty surrounding the 23 June referendum European Union referendum, stubbornly low inflation, a slowing economy and weak wage growth.
“The FTSE could well see its losses intensify as the day goes on with the Bank of England set to stoke those Brexit-fearing fires later this morning with a firmer warning against leaving the EU (the central bank is also expected to unsurprisingly keep interest rates on hold),” said Connor Campbell, financial analyst at Spreadex.
“Mark Carney faced a lot of criticism last time he expressed an opinion on the referendum, so expect an apoplectic reaction from Vote Leave (and perhaps another fall from the pound) as Thursday continues.”
UK retail sales will also be in focus at 0930 BST along with eurozone inflation at 1000 BST and US inflation at 1330 BST.
Meanwhile, oil prices continued to fall on Brexit fears and global supply glut worries with Brent crude down 1.5% to $48.24 per barrel and West Texas Intermediate down 1.4% to $47.31 per barrel at 0857 BST.
In company news, Mulberry Group rose after reporting a jump in full year profit as total revenue and retail sales grew.
Design, engineering and project management consultancy WS Atkins advanced after it reported a 6% rise in revenue in its final results on Thursday, to £1.86bn.
N Brown rallied after the clothing retailer said it was confident of hitting full year targets.
Safestore edged higher after the storage firm said early trading in the second half had been encouraging and it was confident that the business would deliver a strong performance for the year as a whole.
Market Movers
FTSE 100 (UKX) 5,933.75 -0.55%
FTSE 250 (MCX) 16,176.06 -0.75%
techMARK (TASX) 2,955.44 -0.56%
FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 6,845.00p 3.56%
Fresnillo (FRES) 1,241.00p 2.39%
BP (BP.) 362.60p 0.86%
Berkeley Group Holdings (The) (BKG) 2,976.00p 0.74%
Glencore (GLEN) 137.20p 0.51%
Inmarsat (ISAT) 691.00p 0.22%
SABMiller (SAB) 4,277.50p 0.20%
National Grid (NG.) 959.80p 0.01%
BT Group (BT.A) 400.40p -0.00%
Taylor Wimpey (TW.) 170.60p -0.06%
FTSE 100 - Fallers
3i Group (III) 506.50p -3.06%
Severn Trent (SVT) 2,133.00p -2.65%
Barclays (BARC) 157.50p -2.14%
Prudential (PRU) 1,181.00p -1.75%
Ashtead Group (AHT) 981.00p -1.70%
Mediclinic International (MDC) 870.50p -1.69%
Hargreaves Lansdown (HL.) 1,186.00p -1.66%
easyJet (EZJ) 1,383.00p -1.64%
International Consolidated Airlines Group SA (CDI) (IAG) 467.70p -1.56%
Dixons Carphone (DC.) 390.70p -1.46%
FTSE 250 - Risers
Centamin (DI) (CEY) 117.50p 6.62%
Brown (N.) Group (BWNG) 227.00p 5.88%
Atkins (WS) (ATK) 1,244.00p 3.41%
Jimmy Choo (CHOO) 111.50p 2.11%
Acacia Mining (ACA) 347.60p 1.73%
Euromoney Institutional Investor (ERM) 962.50p 1.32%
Polymetal International (POLY) 869.50p 0.99%
Ocado Group (OCDO) 224.70p 0.90%
Safestore Holdings (SAFE) 345.10p 0.82%
Henderson Group (HGG) 239.00p 0.80%
FTSE 250 - Fallers
Restaurant Group (RTN) 322.30p -5.73%
Indivior (INDV) 218.00p -4.13%
Thomas Cook Group (TCG) 60.35p -3.52%
William Hill (WMH) 284.30p -3.07%
Intermediate Capital Group (ICP) 574.50p -2.96%
Amec Foster Wheeler (AMFW) 406.40p -2.87%
Templeton Emerging Markets Inv Trust (TEM) 452.70p -2.79%
Electrocomponents (ECM) 258.40p -2.71%
DFS Furniture (DFS) 280.60p -2.60%
Ophir Energy (OPHR) 68.05p -2.58%